The Ticker
Bank risks bigger than they appear
2/21/13 12:52pm
"Derivatives, like loans, carry risk," said Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp."To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there."
U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.
